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Today I want to talk to you about purchasing a home with a reverse mortgage. Now , this is a message that goes out to the elderly of our community. But it's something that doesn't get talked about all that often.
First off, one thing you never hear about is that 25% of homeowners, own their homes free and clear. Well, a lot of these people are baby boomers. You know, baby boomers are the largest bubble of population in the United States. And the leading edge of the baby boomer population is growing towards retirement age. You've got 65+ year old people in this enormous bubble of population, and a lot of them are in a very similar situation. They own their home free and clear or owe very little on it. They want to leave their home to their heirs. They've got tons of equity in their home, and it's their biggest asset, but they can't enjoy that equity of course unless they do a reverse refinance which is advisable in certain situations. But what's also typically commonplace with these borrowers or these homeowners is they've got their savings, call it two or three hundred thousand dollars in the bank from a lifetime of savings and if they're prudent investors at this stage of their life they're earning about three and half percent interest on their money because they're in fixed income type of investments.
So here's a strategy I'd like you to consider. You're an empty nester. You've got a great big beautiful house. It's your number one asset. You've got your $300,000 in the bank. You're earning $800 a month on it. You've got some social security benefit. Why not go out to the desert, go out to a retirement community, go move next to the kids. Buy a condo for $250,000. If you buy using a reverse mortgage, that 250,000k, let's say you're 68 years old, you would need to come up with 42% down. So you're looking at $112,000 that you'd have to come down, you're going to have to pull that out of your savings. But you never have to make another mortgage payment. So you buy this investment home, you'd still never have to make a mortgage payment. The house you currently own, rent it out.
The beauty of it is if you have that home now, by turning it into a rental, you could earn so much more money than you can by having those dollars sitting in a fixed income vehicle right now, you just can't. You're making no money on it. You feel it.
You're probably going to get $3,000 a month rent. So you've just taken one third of your retirement savings, yielding you $300 bucks a month, bought a retirement home, never have to make a payment on that or the house that you own now, that you own free and clear, you rent it out $2,500 a month, $2,000 a month, you just turned $300 a month of income into $2,000 a month in income and now you own two appreciating assets. Ten years from now, what are those going to be worth?
You've got historically low interest rates, you've got historically devalued homes in the most desirable areas that you can buy using a reverse mortgage if you're over 62 years old, never have a mortgage payment, got to pay your taxes and insurance on these houses, don't forget that. And another key thing to remember is that you have to move into it. Using a reverse mortgage to buy a house is not for an investment property. You have to move into the property, that has to be what you do. It's a disqualifier if you're not going to. But this is a brilliant strategy.
Another thing to keep in mind with a reverse mortgage, there's no income qualification, there's no credit score qualification, there's no debt ratios to concern yourself with, and you don't have to make a mortgage payment. You don't have to make a principle and interest payment. No payment.
Please know: with a reverse mortgage, the borrower retains ownership of the home. There's no equity sharing with the lender, and the title remains in the borrower's name.
The reverse mortgage is available for any homeowner 62 years or older. You are going to have to go through counseling with an independent counselor so you're going to be very well informed of the program.
Right now is great time to buy; affordability is at all time highs. Interest rates are at multi decade lows. Now is the time.
Please give us a call, toll free, anytime (877)891-7634.
One of our mottos is we don't just quote a rate, we analyze and educate. And this is a great, great time to start getting educated on the programs that are available today. My name's Rick Arvielo. I'm the president of new American funding. I'd be proud to offer you information on this and many of the programs that we have. Thanks for listening.
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